[This was originally posted on 9/10. Please see 10/19 update details below. As of today’s (10/19) market close of $219.31, AAPL is trading at a 15.0x multiple on my next-twelve-months EPS estimate (13.9x when excluding next-12-months net cash and dividend).]
Posting a month early and earlier than Wednesday’s occasion, as promised, with the intention to check my assumptions and instinct into this cycle, as I did final yr as effectively with satisfying outcomes.
Essentially the most unsure merchandise for me this time is iPhone pricing. I am modeling a modest discount from final yr costs. Hope Apple can obtain this, as it might permit for a extra sustainable increase to unit development over mid single digits and simply beating the file 231.5m items offered in 2015.
The opposite sources of uncertainty are the Mac and iPad product traces. I am assuming a big replace (lastly) to each traces, introduced and accessible for buy this week. My Mac projections could also be optimistic however the impact on complete income and earnings of any mistake on my half will probably be restricted.
I anticipate a powerful Apple Watch Collection 4 replace, serving to with continued very robust Different Merchandise income development.
Lastly, I’ve barely pared again my buyback depth estimates, and accelerated the gradual valuation growth talked about final quarter from 0.1 to 0.25 quarterly will increase within the EPS a number of, which now goes to 15x by 2022. After all, this extra sensible valuation reduces the variety of shares Apple will have the ability to retire, leading to a moderation of FY19 EPS development from 30% to 23%. Nonetheless, that is nonetheless effectively above Wall Road analysts, who proceed to underestimate the impact of buybacks given their 15% EPS development estimates when in comparison with their 5% income development for subsequent yr (I am at 6% income development).
Detailed estimates:
3mo ending Sep18 Rev$B GM% $EPS ---------------- ----- ---- ---- Analysts consens 61.2 - 2.76 Apple information low 60.0 38.0 2.67* Apple information excessive 62.0 38.5 2.84* My estimates 62.0 38.4 2.83 (4.83b shares) 3mo ending Dec18 Rev$B GM% $EPS ---------------- ----- ---- ---- Analysts consens 91.8 - 4.84 Apple gde lo (e) 91.0 38.5 4.82* Apple gde hello (e) 94.0 39.0 5.09* My estimates 93.6 38.8 5.05 (4.72b shares) *EPS steering ranges derived from different figures supplied by Apple and diluted shares excellent estimated by me 12m ending Sep19 Rev$B $EPS ---------------- ----- ----- Analysts consens 277.2 13.57 My estimates 281.3 14.45 Valuation Timeframe NTMfrom $EPS Y/Y x Val $* Div Tot --------- ------- ----- --- ---- --- -- ---- --- Path Val Oct2017 11.79 28% 10.5 124 24 2.72 150 Honest Val Oct2018 14.45 23% 11.5 166 13 3.08 183 1y Goal Oct2019 16.31 13% 12.5 204 6 3.50 214 *Money per share stability web of long-term debt
F4Q18 Income breakdown: iPhone 36,020 (49.0 × $735) iPad 4,567 (10.8 × $423) Mac 7,400 (5.35 × $1,383) Providers 9,922 Different 4,071 (4.85 × $390 = 1,890 Watch) Revenue assertion: Income 61,980 COGS (38,207) GM 23,773 38.4% OpEx (8,013) OpInc 15,760 25.4% OIE 332 Pre-tax 16,092 Tax (2,414) 15.0% NetInc 13,678 22.1% Shares 4,825 EPS $2.83 (quantities in thousands and thousands besides $ASP, $EPS, and ratios%)
[10/19 UPDATE:
By followers’ request I’m posting my revised estimates as shown below given that some of my assumptions were wrong, precisely those I commented that I was most uncertain: iPhone pricing and Mac/iPad updates. Essentially, higher Watch sales and iPhone ASPs are offset by slower iPhone unit growth, with some modest longer term effects on installed base-related revenue growth. Mac and iPad pent up demand gets pushed to Q1, postponing the return to mid-low single-digit growth. For last quarter (F4Q18), revenue is $0.1b lower and EPS comes out 0.06 cents higher (but rounds off to one cent higher). As for the current quarter (F1Q19), revenue is $1b higher and EPS 8 cents higher. For FY19 rev/EPS got a boost of $3.6b/$0.16 (1.3%/1.1%) but remain unchanged for FY20 and got cut about 2% longer-term.
F4Q18 Estimate Oct(e) Sep(e) Change %Chng -------- ------ ------ ------ ----- Units (millions) --------------------------------------- iPhone 48.00 49.00 -1.00 -2.0% iPad 10.00 10.80 -0.80 -7.4% Mac 5.00 5.35 -0.35 -6.5% Watch 5.00 4.85 0.15 3.1% ASPs ($) --------------------------------------- iPhone 753 735 18 2.4% iPad 422 423 -1 -0.2% Mac 1,436 1,383 53 3.8% Watch 394 390 4 1.1% Revenue breakdown ($Billions) --------------------------------------- iPhone 36.1 36.0 0.12 0.3% iPad 4.2 4.6 -0.35 -7.6% Mac 7.2 7.4 -0.22 -3.0% Watch 2.0 1.9 0.08 4.2% Services 10.2 9.9 0.29 2.9% Other* 4.1 4.1 0.06 1.4% * includes Watch --------------------------------------- Revenue 61.88 61.98 -0.10 -0.2% EPS ($) 2.84 2.83 0.00 0.0% F1Q19 guidance midpoint --------------------------------------- Rev ($B) 93.50 92.50 1.00 1.1% EPS ($) 5.03 4.95 0.08 1.6% F1Q19 estimates --------------------------------------- Rev ($B) 94.67 93.64 1.03 1.1% EPS ($) 5.13 5.05 0.08 1.6%
/UPDATE]
